The incredible shrinking government

As I’ve explained before, during the Great Depression of the 1930s, the Works Progress Administration provided paid jobs for millions of unemployed men and women. Private capitalism couldn’t or wouldn’t generate enough jobs to keep the jobless ranks from swelling. Therefore, the state had to step in, in the form of the New Deal, to provide gainful employment (at market wages) for millions of people.

During the Second Great Depression, government employment has actually been shrinking.

Local and state governments axed more than 200,000 jobs in 2010, according to U.S. Census data released on Tuesday that showed the growing threat of public employee layoffs to the economic recovery.

According to the Census, local and state governments had 203,321 fewer full-time equivalent employees in 2010 than in 2009 and 27,567 fewer part-time employees.

Most local governments cut full-time jobs in 2010, with the biggest decline in Rhode Island, where the workforce shrank 7.7 percent. Those in North Dakota, one of few states to go through the 2007-09 recession unscathed, added jobs in 2010, with its full-time workforce growing 7.5 percent in 2010.

It was the second year local governments lost part-time employees, with cities, counties and authorities in California shedding the most, 47,620.

The job losses have continued this year. John Lonski, chief economist for Moody’s Capital Markets Research told Reuters this month that “we are looking at the worst contraction of state and local government employment since 1981.”